Proof That Netflix Is Destroying Cable TV

A
new report from consumer data company Experian Marketing
Services suggests that online video content services like Netflix
are pulling people away from cable television.

After surveying more than 24,000 U.S. adults, Experian Marketing
Services found that households with a Netflix or Hulu
subscription were nearly three times as likely not to have a
cable subscription than the average household. In total, 6.5% of
the surveyed households did not subscribe to cable in 2013, up
from 4.5% in 2010.

But cord-cutters became 18.1% of Netflix subscribers, up
from 12.7%. Cord-cutters are three times as likely to be Netflix
subscribers than the average consumer, in other words.

Experian Marketing Services

"We had looked at cord-cutting as a trend in years past, but we
hadn’t really seen significant movement in the space because it
was more a small group of people who were actually cutting the
cord," Experian Marketing Services senior marketing manager John
Fetto said. "It’s become something people are actually doing from
something that was just being talked about in New York Times
trend pieces."

Traditional television companies like NBC and CBS receive
licensing fees from Netflix and Hulu for their content, and Hulu
is a joint venture owned by three of the major broadcast
networks.

However, the licensing fees and advertising revenues made online
still pale in comparison to the money the networks take in from
the distribution fees paid by cable operators, to say nothing of
the $60+ billion U.S. television advertising market.

Experian Marketing Services found that while a surprising 42% of
adults watched video content on their smartphones during a
typical week, the real backbreaker for cable companies was when
would-be subscribers were able to stream video content to their
televisions.

According to the report, people who watched streaming video on
the big screens of their televisions were more than three times
as likely not to subscribe to cable. People who said they stream
video to their smartphones and tablets were only 1.5 times as
likely not to have cable.Experian Marketing Services

"We would have thought that you can basically watch video on any
device, but it really appears that the tipping point is whether
they’re actually streaming content to their televisions," Fetto
said. "Having access to on-demand video when they want it without
sacrificing screen size seems to be the real thing that makes a
difference for them."